An anonymous director reports

ARC RESOURCES LTD. REPORTS THIRD QUARTER 2023 RESULTS AND ANNOUNCES 2024 BUDGET

ARC Resources Ltd. has released its third quarter 2023 financial and operational results, and its 2024 budget.

HIGHLIGHTS

Third Quarter Results

• ARC delivered quarterly production of 360,177 boe(1) per day (63 per cent natural gas and 37 per cent crude oil and liquids(2)). Production increased five per cent compared to the third quarter of 2022, and 13 per cent on a per share basis(3).
• ARC generated free funds flow of $261 million (4) ($0.43 per share(5)), out of funds from operations of $662 million (6) ($1.09 per share(7)) and capital expenditures of $401 million (4). ARC recognized cash flow from operating activities of $604 million ($0.99 per share) and net income of $236 million ($0.39 per share).
  • ARC's natural gas diversification activities continued to generate higher realized pricing than local benchmarks. ARC realized a natural gas price of $3.16 per Mcf(7), 32 per cent greater than the average AECO 7A Monthly Index price.
• ARC distributed 71 per cent of free funds flow or $185 million, to shareholders during the third quarter. Through the first nine months of 2023, ARC has returned 92 per cent of free funds flow to shareholders.
  • During the quarter, ARC declared dividends of $103 million or $0.17 per share, and repurchased 4.1 million common shares for $82 million under its normal course issuer bid ("NCIB").
  • Since instituting its first NCIB in September 2021, ARC has repurchased 17 per cent of its outstanding shares at an average share price of $15.81.
• Net debt decreased by $38 million compared to the second quarter of 2023. As of September 30, 2023, ARC's long-term debt balance was $1.1 billion and its net debt balance was $1.2 billion (6) or 0.4 times funds from operations(6).

2024 Budget

• ARC's Board of Directors (the "Board") has approved a 2024 capital budget of between $1.75 billion and $1.85 billion. This is expected to deliver average annual production of between 350,000 to 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids).
• The 2024 budget represents an approximate $200 million decrease in capital spending from what was presented at ARC's June 2023 Investor Update. The decrease reflects operational decisions to minimize non-productive capital and realized cost savings.
• Total capital investments in 2023 and 2024 to complete Attachie Phase I are unchanged.
  • Total capital investment for Attachie Phase I start-up remains at approximately $740 million, with $240 million anticipated in 2023 and approximately $500 million in 2024.
  • ARC is on track to fully complete the 40,000 boe per day facility in the first quarter of 2025, with commissioning volumes expected in late 2024.
• ARC intends to return essentially all of its free funds flow to shareholders. The optimal method to return capital remains a growing base dividend and share repurchases.

ARC's unaudited condensed consolidated financial statements and notes (the "financial statements") and Management's Discussion and Analysis ("MD&A") as at and for the three and nine months ended September 30, 2023, are available on ARC's website and under ARC's SEDAR+ profile. The disclosure under the section entitled "Non-GAAP and Other Financial Measures" in ARC's MD&A as at and for the three and nine months ended September 30, 2023 (the "Q3 2023 MD&A") is incorporated by reference into this news release.

(1) ARC has adopted the standard six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil ratio when converting natural gas to barrels of oil equivalent ("boe"). Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.

(2) Throughout this news release, crude oil ("crude oil") refers to light, medium, and heavy crude oil product types as defined by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Condensate is a natural gas liquid as defined by NI 51-101. Throughout this news release, natural gas liquids ("NGLs") comprise all natural gas liquids as defined by NI 51-101 other than condensate, which is disclosed separately. Throughout this news release, crude oil and liquids ("crude oil and liquids") refers to crude oil, condensate, and NGLs.

(3) Represents average daily production divided by the diluted weighted average common shares outstanding for the respective three months ended September 30.

(4) Non-GAAP financial measure that is not a standardized financial measure under International Financial Reporting Standards ("IFRS") and may not be comparable to similar financial measures disclosed by other issuers. See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for information relating to this non-GAAP financial measure, which information is incorporated by reference into this news release. See "Non-GAAP and Other Financial Measures" of this news release for the most directly comparable financial measure disclosed in ARC's financial statements to which such non-GAAP financial measure relates and a reconciliation to such comparable financial measure.

(5) Non-GAAP ratio that is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Free funds flow, a non-GAAP financial measure, is used as a component of the non-GAAP ratio. See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for the non-GAAP ratio for the comparative period and other information relating to this non-GAAP ratio, which information is incorporated by reference into this news release.

(6) See Note 10 "Capital Management" in the financial statements and "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for information relating to this capital management measure, which information is incorporated by reference into this news release.

(7) See "Non-GAAP and Other Financial Measures" in the Q3 2023 MD&A for an explanation of the composition of this supplementary financial measure, which information is incorporated by reference into this news release.

2024 BUDGET

The 2024 budget prioritizes disciplined growth and long-term profitability. To achieve this, ARC will pursue capital efficient Montney development by completing its first phase at Attachie, and advance margin expansion opportunities such as long-term liquefied natural gas ("LNG") supply agreements. Combined, these actions are expected to result in meaningful growth in free funds flow per share in 2025 and beyond.

The budget adheres to ARC's guiding principles of operational excellence and capital discipline, and leverages the competitive strengths established over its 28 years that include world-class people, high-quality assets, and a transportation portfolio with global reach to key demand markets.

Highlights

• ARC plans to invest between $1.75 billion and $1.85 billion (1) in capital expenditures in 2024 to generate average production of between 350,000 and 360,000 boe per day (63 per cent natural gas and 37 per cent crude oil and liquids).
• Capital expenditures, excluding the investments at Attachie, represent an approximate 25 per cent decrease compared to 2023. The lower capital expenditures on the base assets is primarily related to a lower corporate decline rate, lower capital expenditures at Kakwa, operational decisions to minimize non-productive capital, and realized cost savings.
• ARC estimates capital expenditures required to maintain production at 350,000 to 360,000 boe per day to be between $1.3 billion and $1.4 billion.
• Production guidance in 2024 incorporates the anticipated expiry of an ethane sales contract in the second quarter that will reduce reported NGL production by approximately 5,000 barrels per day on an annualized basis in 2024. As a result, ARC expects to re-inject ethane into its natural gas stream resulting in an expected increase in revenue from sales of higher heat content natural gas that will offset the impact to funds from operations.
• Kakwa production is expected to average approximately 180,000 boe per day (175,000 boe per day upon expiry of the ethane sales contract). This is the optimal production level to maximize profitability and moderate the decline rate, with an estimated 15 years of inventory at this production level from currently identified locations:
  • Condensate production at Kakwa is expected to remain relatively flat in 2024 compared to 2023 despite lower capital spending and fewer planned wells at Kakwa. Development in 2024 will focus primarily in the condensate-rich areas of the asset, following 2023 activity where ARC planned and executed development in areas where condensate gas ratios were lower.

Attachie Phase I

• Total capital investment to bring Attachie Phase I on-stream to its facility capacity is unchanged at approximately $740 million, with approximately $240 million planned in 2023 and $500 million in 2024.
  • ARC is on track to complete the first phase of Attachie (40,000 boe per day facilities, 40 per cent natural gas and 60 per cent crude oil and liquids) in the first quarter of 2025, with commissioning volumes expected in late 2024.
  • Infrastructure related capital represents 55 to 60 per cent of the total investment, with the remainder allocated to the drilling and completion of approximately 40 wells to initially fill the facilities in 2025. (1) Refer to the section entitled "About ARC Resources Ltd." contained within the Q3 2023 MD&A for historical capital expenditures, which information is incorporated by reference into this news release.

• ARC estimates that the facilities and related infrastructure are approximately 20 per cent complete to date.
  • The natural gas sales line is installed, and the liquids line is progressing as planned.
  • ARC expects Attachie Phase I to be fully electrified through BC Hydro upon start-up, thereby lowering ARC's emissions intensity per boe. -ARC plans to begin drilling at Attachie Phase I in the fourth quarter of 2023 utilizing its existing rig fleet, and has secured services to fully execute the capital program.

2024 Guidance

ARC's 2024 corporate guidance is based on various commodity price scenarios and economic conditions; certain guidance estimates may fluctuate with commodity price changes and regulatory changes. ARC's guidance provides readers with the information relevant to Management's expectations for financial and operational results for 2024. Readers are cautioned that the guidance estimates may not be appropriate for any other purpose.

2023 Guidance

Full-year 2023 guidance for production, expenses, and capital expenditures remains unchanged. Refer to the section entitled "Annual Guidance" in ARC's MD&A for the three and nine months ended September 30, 2023, available on ARC's website and under ARC's SEDAR+ profile.

OUTLOOK

ARC provided details of its long-term strategy at its Investor Update in June 2023 following the sanction of Attachie Phase I. The strategy relies upon a disciplined investment framework that balances organic growth in the Montney with a meaningful return of capital to shareholders that is sustainable through commodity price cycles. Underpinned by its financial strength and high-quality asset base, ARC remains committed to returning essentially all free funds flow to shareholders.

The development of Attachie over multiple phases, beginning with Phase I in 2025, will represent a positive fundamental change for ARC. This aligns with demand growth in both local and global end-markets, where the Company has long-term transportation agreements in place to deliver its products.

The first phase of Attachie marks the eighth Montney infrastructure project for ARC, and remains on schedule and within budget. Consistent with the Company's long track record of execution, ARC has taken steps to mitigate risk and manage the costs to achieve the financial returns as planned. Long-lead items were procured in advance, drilling and completions services are secured, and drilling activity is expected to commence in the fourth quarter of 2023.

With Attachie Phase I anticipated to be on-stream in 2025, ARC is positioned to achieve a significant step-change in production and free funds flow per share:

• Production is expected to increase approximately 10 per cent, and 27 per cent per share(1) compared to 2023.
• Free funds flow per share is expected to increase by approximately 100 per cent compared to 2023.

The anticipated per share growth is driven by a combination of capital efficient Montney growth and a meaningful return of capital in the form of share repurchases. Cumulative capital expenditures in 2024 and 2025 are expected to represent approximately 50 per cent of funds from operations, with the remainder allocated to base dividend growth and share repurchases. Net debt is expected to remain relatively flat, implying a net debt to funds from operations ratio of approximately 0.5 times.

The outlook through 2025 is outlined below, subject to Board approval.

FINANCIAL AND OPERATIONAL RESULTS

Production

ARC's production averaged 360,177 boe per day during the third quarter of 2023 (63 per cent natural gas and 37 per cent crude oil and liquids). Production increased five per cent year-over-year, and 13 per cent on a per share basis. The increase in production was driven primarily from Kakwa and Sunrise.

Production in the fourth quarter of 2023 is estimated at approximately 355,000 boe per day (62 per cent natural gas and 38 per cent crude oil and liquids).

Funds from Operations, Cash Flow from Operating Activities, and Free Funds Flow

Third quarter 2023 funds from operations was $662 million ($1.09 per share), representing an 18 per cent increase from the second quarter of 2023. The increase was driven by a combination of higher production volumes and average realized commodity prices, offset primarily by higher royalties and current taxes.

Third quarter 2023 cash flow from operating activities was $604 million, increasing by $53 million ($0.09 per share) from the second quarter of 2023.

ARC generated free funds flow of $261 million ($0.43 per share) during the third quarter of 2023, representing an increase of $117 million ($0.19 per share) from the second quarter of 2023.

Shareholder Returns

During the third quarter, ARC distributed 71 per cent or $185 million ($0.30 per share) of free funds flow to shareholders through a combination of dividends and share repurchases under its NCIB.

• During the third quarter 2023, ARC declared dividends of $103 million ($0.17 per share).
• ARC repurchased 4.1 million common shares under its NCIB at a weighted average price of $19.95 per share.

In the first nine months of 2023, ARC has returned 92 per cent of free funds flow to shareholders.

Since commencing its initial NCIB in September 2021, ARC has repurchased approximately 17 per cent of total outstanding shares or 124 million common shares, at a weighted average price of $15.81 per share.

ARC intends to continue to distribute essentially all of its free funds flow to shareholders.

Operating, Transportation, and General and Administrative Expense

Operating Expense

Operating expense per boe increased three per cent or by $0.13 per boe quarter-over-quarter, reflecting planned maintenance activity.

ARC's operating expense is expected to decrease in the fourth quarter with planned maintenance largely complete. ARC's full-year 2023 operating expense is expected to be within the guidance range.

Transportation Expense

ARC's third quarter 2023 transportation expense per boe of $4.94 decreased by $0.40 per boe from the second quarter of 2023 primarily due to increased volumes.

ARC's full-year 2023 transportation expense is expected to be slightly below ARC's guidance range of $5.50 to $6.00 per boe primarily due to modifications to certain natural gas transportation contracts and lower fuel gas expense.

General and Administrative Expense

ARC's third quarter 2023 general and administrative expense before share-based compensation expense per boe of $1.01 decreased by $0.09 per boe from the second quarter of 2023.

General and administrative expense through the first nine months of 2023 of $1.68 per boe is above Company guidance primarily due to share based compensation expense related to share price appreciation.

Cash Flow Used in Investing Activities and Capital Expenditures

Capital expenditures in the third quarter were $401 million. ARC drilled 33 wells and completed 35 wells during the third quarter, focused mainly at Kakwa, Greater Dawson and Sunrise. Other capital expenditures included Attachie Phase I infrastructure.

Cash flow used in investing activities was $395 million during the third quarter of 2023. During the nine months ended September 30, 2023, cash flow used in investing activities was $1.3 billion. Of this, ARC invested $1.3 billion in capital expenditures to drill 111 wells and complete 118 wells.

Physical Marketing & Risk Management

In the third quarter, ARC realized an average natural gas price of $3.16 per Mcf, 32 per cent greater than the average AECO 7A Monthly Index price for the period.

The Company continues to advance additional opportunities to supply natural gas to international markets through long-term LNG supply agreements. -ARC plans to market up to 25 per cent of its future natural gas production to international markets with revenue linked to international or LNG pricing.

Net Debt

As of September 30, 2023, ARC's long-term debt balance was $1.1 billion, and its net debt balance was $1.2 billion or 0.4 times funds from operations.

ARC targets its net debt to be approximately 1.0 times funds from operations and manages its capital structure to achieve that target over the long term. Long-term debt is comprised of $1.0 billion of senior notes outstanding and $0.1 billion in borrowings under the Company's credit facility.

ARC holds an investment-grade credit rating, which allows the Company to have access to capital and manage a low-cost capital structure. ARC is committed to protecting its strong financial position by maintaining significant financial flexibility with its balance sheet.

Net Income

ARC recognized net income of $236 million ($0.39 per share) during the third quarter of 2023, a decrease of $43 million ($0.07 per share) from the second quarter of 2023.

BOARD OF DIRECTORS UPDATE

Mr. Farhad Ahrabi will be retiring from the Board at year end 2023. ARC would like to extend its sincerest gratitude to Mr. Ahrabi for the guidance he provided during his four-year tenure.

CONFERENCE CALL

ARC's senior leadership team will be hosting a conference call to discuss the Company's third quarter 2023 results on Friday, November 3, 2023, at 8:00 a.m. Mountain Time ("MT").

• Date Friday, November 3, 2023
• Time 8:00 a.m. MT
• Dial-in Numbers
• Calgary 587-880-2171
• Toronto 416-764-8659
• Toll-free 1-888-664-6392
• Conference ID 75545576

Callers are encouraged to dial in 15 minutes before the start time to register for the event. A replay will be available on ARC's website following the conference call.

About ARC

ARC Resources Ltd. is a pure-play Montney producer and one of Canada's largest dividend-paying energy companies, featuring low-cost operations and leading ESG performance. ARC's investment-grade credit profile is supported by commodity and geographic diversity and robust risk management practices around all aspects of the business. ARC's common shares trade on the Toronto Stock Exchange under the symbol ARX.

We seek Safe Harbor.